UK Shariah Compliant Islamic Bond

UK Shariah Compliant Islamic Bond.

The UK looks set to become the first non-Islamic country to offer a Shariah compliant Islamic Bond.

Speculation mounts both in media and the financial sector that Prime Minister, David Cameron, will confirm the move this week.

What is Shariah Law?

When it comes to investments, it is against Islamic law to makes gains via interest.  Whilst respecting in individuals beliefs, it can be difficult in an Western Economy to offer financial products and services that do not have interest paid or payable.

The UK has developed Shariah compliant mortgages and bank accounts, but this move by Mr Cameron sets the UK’s foot firmly in development financial service propositions that appeal to all peoples not just in the UK but also overseas.

The government currently issues Gilts where it borrows and pays an interest or coupon.  The hope is that the Treasury have been working with financial companies to develop an investment opportunity that will comply,  the investment instrument is known as a Sukuk.

Comment

By offering Sukuks, the UK will be the first sovereign nation outside the Islamic region to offer such a bond. 

We suggest the Prime Minister is driving the UK forwards to protect its position as the number 1 financial centre of the World.  A couple of weeks ago there was the deal with China for its currency exchange to be traded in London and now moves into Shariah compliant bonds.

Is the UK priming itself for less ties with Europe and ultimately greater ties with emerging markets, with the goal of a full European Union exit?